The Legal and Tax System

According to the Federal Constitution, the States have administrative competence or remaining competence to all subjects that are not privative of the Union and the Municipalities. Based on the Checks and Balances Principle, the Constitution defines as the powers of the Union, the Legislative, Executive and Judiciary branches as independents and harmonious.

Taxation in Brazil is mainly regulated by the 1988 Federal Constitution, the National Tax Code of 1966, and the Federal Income Tax Code. Taxes are payable by all private business entities resident in Brazil, including corporations, limited liability companies, partnerships and solepartnerships (SCP), and branches and agencies of corporations with head offices abroad. Taxes are levied by the federal, state and municipal governments.

These incentives aim to stimulate economic growth by increasing employment, income, encouraging technology improvements and specifics matters to industries development. Most importantly, the tax and financial incentives aid companies to make their business more profitable, once it affects directly in the company’s results.

Labor relations in Brazil are governed by the Consolidated Labor Laws and numerous complementary laws and regulations. Among other things, it legalizes unions, collective bargaining, and the right to strike in both the public and private sectors. The constitution also sets overtime rates, provides for a monthly minimum wage, and regulates working hours. It lists a variety of labor entitlements, including maternity leave, vacation, worker’s compensation, social services, medical assistance and unemployment benefits.